About Piponomics

Economics plays a huge role in the foreign exchange market. I enjoy looking at economic trends and trying to see how it may affect currencies, and life in general. I will post my thoughts and observations here. I'm throwing macroeconomics, forex trading, pop culture, and everyday life into a pot and hopefully the final product are lessons about the FX market that's easy to understand.

4 News Reports You Can Trade This Week

You can think of GDP as an economic barometer. It is the most comprehensive measure of economic activity, which makes it the one of the most favorite gauges for economic health. Technically, it can be defined as the measure of the change in the total value of goods and services produced domestically.

When will it be released?

Canada will release its GDP report for June later today at 12:30 pm GMT. Analysts are expecting to see its economy print a clean bill of health with a 0.2% growth forecast from May’s 0.1% reading.

Then Australia will take center stage on September 1 at 9:30 am GMT. After disappointing expectations last June with the Q1 GDP figure falling 0.1% short of the consensus, the Australian economy is expected to have made a comeback during the second quarter. The forecast is up at 0.9% after previously coming in at 0.5%.

Lastly, we have Switzerland’s GDP report on September 2 at 5:45 am GMT. And boy did analysts raise the bar high! The forecast for the second quarter is at 0.8% which is DOUBLE that of the reading for the first quarter!

Effect on CAD, AUD and CHF?

Better-than-expected figures will probably be bullish for the currencies as these would mean that economic activity is expanding and imply that their domestic economies are A-okay! However, if the numbers come in worse-than-expected, we may just see the currencies get trampled by the bears. Yikes!

2. ECB Interest Rate Decision

What is it?

Interest rate changes have a huge influence on exchange rates because they dictate the flow of money. Investors and traders usually want the “biggest bang for their buck” for their capital so they make sure they put their money where it gives the highest profit.

When will it be released?

It will come out at 11:45 am GMT on Thursday. The ECB is expected to keep rates once again unchanged at 1.00%, so trades will most likely focus on what the bank has to say.

Effect on EUR?

The effect of the decision on the euro will largely depend on what the ECB’s accompanying statement. If the ECB continues to highlight the weakness in euro zone’s job market, expect a slight euro sell-off to follow. However, a statement that emphasizes higher inflation in the future could lead to a stronger euro.

3. FOMC Meeting Minutes

What is it?

The meeting minutes gives the public an inside look into how the FOMC made its interest rate decision. It details what was said in the meeting, the economic factors that they considered in deciding rates, and the actual decision itself. Should the minutes differ greatly from the official announcement three weeks ago, we could see investors and traders make adjustments to their positions.

When will it be released?

It will come out 6:00 pm GMT on Tuesday. Effect on USD?

With quantitative easing on the table, it looks like we could see more dovish comments from Fed Reserve Chairman Ben Bernanke this time around. Like in the minutes last July, we could see the dollar receive a serious beating!

4. Non-farm payrolls

What is it?

Ahh, the mother lode of all economic reports, notorious for setting off fireworks and hundred-pip moves across the charts… The non-farm payrolls report reveals the change in the number of people employed during the previous month. As such, it is considered the barometer of the US labor situation. Aside from that, it also serves as a leading indicator for consumer spending and overall economic activity since much of that depends on whether individuals are able to hold on to their jobs.

When will it be released?

It is due 12:30 pm GMT on Friday.

Effect on USD?

As usual, plenty of traders are all eyes and ears on the upcoming non-farm payrolls report, knowing how it could determine the US dollar’s direction for the near term. If the actual report comes in much weaker-than-expected, this could confirm that the US economy is in big trouble. Poor jobs growth could give the Fed enough reason to implement another round of stimulus measures, which could lead to another dollar sell-off.

Are you ready for those swash-buckling moves this week? With market-moving releases every now and then, better hold on to your hats and brace yourselves for a ton of volatility. If you ain’t ready to handle those fireworks, it’d be safer to just watch all the action from the sidelines. Bear in mind that the pairs could also start swinging to and fro minutes before the actual releases. Don’t say I didn’t warn ya!